Maybe I misunderstand your first sentence (paragraph) but I don’t see Wilder trailing a stop??? The stop is only moved once an ACTUAL swing low (or high) has been formed not???
Anyway: all I’m saying is that ‘pulling a thumb-suck round figure out of the ether’ doesn’t ‘sit well’ with me.
What I do (with most all of my trading systems) is this (and always working off of a bid price only chart):
In the case of fixed spreads (I’ve have the choice at Deltastock between fixed and variable spreads on Spot FOREX anyway):
Assuming a short trade:
My stop will be placed at the swing high plus the spread plus five EXCHANGE ticks (in the case of Spot FOREX it will be just five pips).
Assuming a long trade:
My stop will placed at the swing low minus five EXCHANGE ticks (in the case of Spot FOREX it will be just five pips).
In the case of variable spreads I DOUBLE the ‘Target Spread’ and apply that spread to the above.
This seems to be my ‘sweet spot’ (for the Swing Index System on CFDs on the major indices and commodities anyway).
My fear is that with Adam though: these stops MAY be too close. Then again (as I’ve noted): there is not REALLY that much difference in the ‘logic’ between Adam Theory and the Swing Index System (the main difference being that the Swing Index System is a ‘true stop and reverse’ or ‘always in’ trading system whereas Adam Theory is really a ‘go one way with the market’ trading system).
Anyway: initially that’s how I’ll ‘handle’ any Adam Theory stops (same way as I do with CFDs as described above).
But it’s like any trading system really and it depends on whether or not you want to lock in profits quickly (and run the risk of being stopped out prematurely) or give the trade ‘room to run’ to catch the bigger moves. I mean if Adam Theory is ‘right’ most of the time ‘in real-time and on-the-fly’ then one could very well simply start trailing a profitable stop on a day-by-day (bar-by-bar) basis. If stopped out prematurely: as you say ‘just jump on the train…’ again is all or move on to the next trade (and one could apply the same logic to my method of placing stops as detailed above of course).
Perhaps I’m using the term “trailing stop” and shouldn’t be. My point (I think) is that the stop is being moved at regularly defined points. Regular in that, once the market has risen and formed a higher swing high, then fallen and formed a higher swing low, and then starts rising again, past the swing high, we move the stop to below the new swing low. How much below I think is down to preference.
wow, that sounds really tight
yes, sounds a bit too close to me.
I was thinking about this. I initially thought was a good way to go. You set the SL to lock in some profit. If hit, then fine, but as soon as you are hit, you place a pending order to get back in again. If the market then does indeed continue to rise, you would be back in as you were. Best of both worlds…
…however…I thought about it a bit further. You need to give the trade scope to breath. If the market does continue onwards, according to Adam, that is the time you are supposed to add to your position. If you are closing an order to lock in some profit, and then opening a new one to carry on, there is no opportunity to ever add to an existing position.
Now all of that sounds great in principle, but I think it is pretty hard to implement. Not only do you have to fly in the face of convential trading and buy a the “top”, but you then have to give the trade a lot of breathing space to let the trade run, and you then also have to add to the position. IF you catch the trend early on, then this will work really well (if you are brave ebough to hold on).
I’m looking at the AU 4H chart. It started trending up late December. If I entered in mid Jan I would still be in my trade now and would have perhaps added to my position twice since the entry (on the 25th Jan and 3rd Feb). Note that the 3rd Feb entry is in fact the entry that I took .
I’m looking to try getting onto a trend early (ish). Now this is a risky test because of the currency I have chosen…EURCHF
EURCHF has started rising over the last few days. These was no volatility in it as it fell (because of the SNB intervention threat), but vol appears to have returned today as it rises. It has now hit resistence at 1.21.
Once (if) 1.21 is passed, I will start to monitor it and base the entry entirely off a good looking projection.
Alright well: I received an email from some person by the name of “Mirabo Andreea”. I have NO idea who this individual is or where ‘it’ (not even sure if it’s a ‘he’ or a ‘she’ or a ‘combo’) got my email address from. But no matter: it’s obviously spam mail BUT there’s some interesting stuff on ‘its’ blog relating to Gann, phases of the moon, all manner of stuff along those lines. I couldn’t post the links individually because there’s no single link to an index where all of these topics can be found so I converted the email to an Adobe .PDF document and attached it here. The links should work (well they do for me) from within the Adobe .PDF document.
While it’s not Adam Theory (probably more applicable, if applicable at all, to The Delta Phenomenon really or Gann enthusiasts and that ASSUMES of course that the information is correct) I thought it may interst some here. I’ve only have a sort of ‘quick scan’ of the links and if I have time MAY just give the links a bit of a more ‘in depth look’.
I know I’m certainly going to track down ‘it’ and send them an invoice for driving traffic to their blog!!! LOL!!!
And yes: SOMEWHERE along the line ‘it’ is trying to sell something but the information may be interesting to some.
I remember you having mentioned that before and I must admit that I have serious problems with it … no matter who ‘proved’ it.
Come to think of it, even if George Soros or King Midas himself told me that they made all their money by trading according to moon phases, my initial reaction would be ‘[I]crap![/I]’.
I have to tell you though: I also used to think that all this stuff was ‘fluff’. I’m not saying it’s NOT but I’m no longer emphatically saying it IS either.
And DO NOT SHOOT THE MESSENGER!!! LOL!!! I promise you: it’s not MY blog that’s for sure!!! LOL!!!
I just wanted to express my general disbelief (not to say distaste) of astrology and similar fields of ‘science’.
To me, this stuff belongs to the same category into which religious fanatics saying that ‘[I]God made planet earth 5000 years ago and then made it look to be six or seven billion years old[/I]’ need to be dumped.
I’m going to prefix this by say, I absolutely don’t believe in any form of astrology whatsoever…
…but…
I actually do think there is something about the moon.
Men and women (women in particular) have been scientifically proven to do things in cycles that are linked to the moon. I remember reading about conception rates and there is an uncanny correlation with conception and the new moon (it might be the full moon, I can’t remember which). Scientists have even tested the decision making process in men and have found that statistically, men taken different decisions around the new/full moon.
Also, if someone had said to me that there is order in the markets and it is all linked by a simple series of numbers (fibonacci), I would have said “what a load of rubbish”. However, now I have seen it for myself, I would not say that any more.
So, whilst I do struggle with the moon thing, I do think there could actually be something there so I wouldn’t totally discount it. I’m not saying I would trade off it, but I’m just saying, too many co-incidences for there to be nothing.
It’s probably just that I feel uncomfortable acknowledging that a piece of rock circling the earth at great distance and being illuminated from a certain angle by a stellar body even further away should influence my behaviour.
I’m looking at the EURJPY 4H chart. It looks pretty good to me. We are just about to go over highs and resistence from January, and the same area is big resistence from the whole of December. The 2nd projection looks good as of right now.
So lets say we breakout above this level. My problem is, lets say I enter at around 102.40. My stop is under the swing low either at 99.6 or even lower at 99.0 if I am being conservative. That places my stop something like 280 pips giving me hardly any volume if I am trading 1% or 2%.
So, should I take the trade anyway, albeit with a small volume, or wait for it to go up, retrace and generate a new higher swing low, and then enter on the next breakout (assuming the entry is ok). The stop should then be much closer and more attractive.
Actually, as I wrote that I think I answered my own question. Perhaps the answer is…both. Enter now and then re enter again if appropriate later on, adding to the position. Any thoughts?
I assume with ‘[I]small volume[/I]’ you mean a relatively small position size?
I think that if you aren’t 100% convinced about a trade idea, you shouldn’t take the trade at all … opening a smaller than usual position just means that you want to take the trade (with your heart) but aren’t convinced of it (in your head); that’s not very effective.
I think scaling into a trade that runs nicely is always a good idea … but only if you believe in your trade idea from the beginning on (see above).
I’ve used your ‘Adam Tool’ on several occasions now, with varying results.
I guess it takes a lot of practice, to know when to employ it.
Cheers,
O.
Edit/P.S.: Does anybody know how to draw a horizontal line in this forum? The usual ‘[I][hr][/I]’ doesn’t work. I’m tired of typing 50 times ‘____’ and then center it.
Yeh well. Good job you didn’t ‘quote’ me. You never know: some people have no sense of humour!!! LOL!!!
Well I’d say THIS:
As I understand Adam you’d be following every rule in the book really let’s face it. I’m just of the opinion that you could already have been in a long trade with Adam (but of course: that would mean NOT waiting for a break of previous highs).
This is where things get subjective (for me anyway). Examples of this: Wilder’s Directional Movement System and Wilder’s Swing Index System. The INITIAL ENTRY is based on ONE rule while the stop and reverses are based on different rules. That’s never made sense to me and the reason I ignore them (the INITIAL ENTRY rules anyway). Put it this way: the Swing Index System would ALSO have you wait for break of recent highs or lows (based on the ASI reading) but once you’re IN a trade??? That no longer applies i.e. if you get a signal to stop and reverse then you place an order to stop and reverse. In other words: once you’re IN a trade there no waiting for recent highs or lows to be taken out. With the Directional Movement System: you enter AT MARKET but when given a signal to stop and reverse you use a stop order ‘a couple of ticks above the high or below the low’ (of the signal bar). Why should the ENTRY method be different from the stop and reverse method??? I mean: all a stop and reverse IS is a new position in the opposite direction (obviously closing the original position at the same time). See what I’m saying??? While I’m sure there’s a logical (technical) reason for this: with both of THESE systems I’ve seen too many points or pips ‘go by’ before entering (with the Swing Index System) and I’ve gotten into bad trades which I would NOT have gotten into had I NOT entered AT MARKET but entered using a stop order instead (with the Directional Movement System).
So!!! The above probably isn’t any help to you!!! LOL!!! All I can say is if it were ME and I had the luxury of the indicator (or was watching that pair on that time frame and solving Adam as I do): I would have gone long the very MOMENT that projected probable pullback was no lower than my entry price and would ‘takes my chances’ that way. Not STRICTLY Adam obviously. Maybe also a bit of the ‘greed’ or the ‘trying to get in earlier’ syndrome(s). Probably both (or both being the same thing).
And then there’s the ‘psycho factor’. I may live to ‘eat my words here’ but Adam or not: you couldn’t PAY me to go long that pair because I just don’t see how it’s possible for the major indices to keep on going up the way they have been. Not based on ANYTHING other than my looking at the charts and noting that the S&P 500 is at a critical resistance level right now. So what does a person do??? If you solved Adam for the Dow RIGHT NOW it’d probably project the Dow going WAY past 14 000 (my ‘magic number’). THAT FAR without a pullback or a correction??? I JUST DO NOT SEE IT HAPPENING. NOT EVEN if Europe in its ENTIRETY sorted out all it’s problems in the next HOUR (forget about JUST Greece or JUST Portugal or JUST Italy)!!! LOL!!! But I guess we’ll see. I won’t feel TOO bad because in the book I seem to remember Wilder saying that he was wrong and Adam was right!!! The stock market is ‘partying hard’ in my opinion. And REALLY only because of the jobs numbers last week. Just WAIT until they get revised DOWN. While I don’t base any trading decisions based on OPINIONS expressed on Bloomberg TV: the figures you cannot discredit. On the one hand: FANTASTIC jobs number. On the other hand: just about evey financial institution is laying off THOUSANDS of people. And not to mention that ‘seasonal factor’ in the jobs numbers. Alright: my understanding of fundamentals is not much more than ‘rudimentary guessing’ but something just doesn’t ‘gel’ with me. As I noted at the beginning of this year (when I got a new ar*ehole ripped open when the US indices opened for trading in January): at the time of the very VERY last POSSIBLE trades last year ‘the end of the financial world as we knew it’ was going to come to an end and Europe was going to slide into the sea etc. What happened: RIGHT from the FIRST trading day of this year the European indices rallied for DAYS and DAYS on end. It’s like 2011 never even happened or the financial world ‘fixed itself’ over the New Year weekend without any of us knowing it. Nah. If I’m wrong I’m wrong of course. It’ll be my loss. But I don’t get it. As a matter of fact: as I’m typing this there’s just been a snippet of Larry Fink from Blackrock saying that investors should be 100% into stocks!!! 100%!!! Well if memory serves me correctly: wasn’t a) Blackrock somehow either responsible for or involved with the events of 2008 and 2009 (or am I thinking of another company) and b) given the size of the fund that he manages, and given the ‘clout’ that his word has, so everyone ELSE PILES into stocks, and he shorts them when there’s no more buyers and c) he’s an investor not a trader so even although stocks may be very cheap worldwide I’m guessing that THIS time a ‘buy and hold’ LONG term strategy may work (as used to be the case). But I don’t have a few billion USD worth of ‘cushion’ underneath me to ride out any corrections or pullbacks along the way.
ALL OF THE ABOVE of course being totally NON-Adam Theory I know!!! LOL!!! Sorry. Probably a LOT more than you wanted to ‘hear’. I guess the SHORT version (which ironically does agree with LONG TERM Adam Theory) is that I believe that EUR/JPY and EUR/USD are going DOWN with the stock market at some point and sooner rather than later.
The only OPPOSITE opinon: go long but trail a profitable stop at the first chance you get.
Yes. With a £5000 account, 2% is £100. To risk £100 with a stop loss of 280 pips gives me an approximate lot size of 0.3 (spreadbet broker in UK).
I think you have helped here, so thanks. Yes I am 100% convinced about this trade, I think the projection is good, if the breakout occurs. So, I will place the trade with a volume of 0.3 and just wait to see what happens.
I think it is quite easy to use it too early. I look at the charts and only do the projection when approaching a high (or low). Point being, if that high or low is passed, and the projection is good, then I enter the trade. It is not just any high though, it has to be the highest high so far (unless we have a change in the trend, in which case we have to wait for it to establish). None of the other two clues have really happened yet, a couple of big moves in a bar, but nothing substantial enough for me to think it was “a sign”, so they haven’t come into play yet.
Well there you go. Just do that 50 times!!! LOL!!!
Although what’s ODD: as I’m typing this reply I can actually see the horizontal line going RIGHT ACROSS the part of your post I’m quoting. I’m not sure if it’s going to appear once I post this post thought.
Edit: nope. It doesn’t appear in the actual POST but when I quote you the line is there (although it seems to overlap or ‘overshoot’ by one single ‘_’ and that’s all you’re seeing in the post once it’s been posted).
Regards,
Dale.
Edit:
I just did a test with the ‘Go Advanced’ editor. There’s an icon there to click on to ‘Draw Horizontal Line’. That does INDEED draw a horizontal line while you’re editing your post but doesn’t display once you’ve posted your post.
It’s no secret that this version of vBulletin has been ‘buggy’ from the very beginning (I still prefer the old version or format of BabyPips to be honest).
So Oliver1968: looks like you’re stuck with hitting the ‘_’ 50 times!!! Here’s a tip: increase your typematic rate setting in your PC’s BIOS. Then you can just hold the key down and the line will be drawn in NO time!!! LOL!!!
I see you used {hr}-{/hr} … most forums I’m acticve in draw a horizontal line by simply using {hr} (.i.e. ‘horizontal rule’).
I guess I’ll just ask support for a list of avialable commands for the BabyPips forum … typing an underscore 50 times and then centering it sucks, hehe … and if you try it with more than 50, the line gets broken. Weird stuff.
I know I’ve always had a personal problem and I’ve just been sent the unknown (up until now that is) diagnosis from Investopedia (to which I subscribe):
Someone woke up in the UK £45,000,000 better off this morning after winning the euromillions jackpot.
I would be happy with a bit of SWS, given the opportunity…
Back to my EURJPY, I think the longer term long trade could still be on, but only once it breaks above the 102 level (and assuming the projection looks ok).
However I noticed we have come away from that price level over the last few hours as it has dropped about 50 pips. That resistence is doing its job. So I switched to the 5M timeframe out of curiosity, and I am now lining up a short!
Lower lows and lower highs being formed. There is some support below around 101.6 - 101.7, but nothing other than that. So if we break that, I recon I’ll go short.
That is based on absolutely nothing other than the charts and the 2nd Projection. So, a potential long off the 4H and a short off the 5M.
